Words: Ashley Rigg
Published: 20th October 2011
*BBC hits out at overseas property network
A programme broadcast on the BBC last night has hit out at former IFA overseas property network ROPUK for their involvement in selling an off-plan project in Cyprus.
BBC Inside Out North East and Cumbria criticises ROPUK and former director Andrew Laird for failing to explain the risks to hundreds of investors buying into the St George Hills project by Alpha Panareti.
The TV show claims that Laird and his “army of IFA’s” only put the positive side of the investment story forward and did not fully explain the interest rate or currency risks or the danger of non-completion.
One owner speaking on the programme explains how he is paying over £2000 a month on a mortgage taken in out in Swiss Francs for an uncompleted property which is now worth less than half what he paid for it.
The situation is made worse by the fact that owners have not received their title deeds as deeds cannot be issued in Cyprus unless the project is fully complete. The BBC claims they saw currently no evidence of construction work being carried out on the site although Alpha Panareti deny this.
The programme concludes by showing Laird’s large country house to contrast with the situation of some of the investors in St George Hills who have been left in dire straights. Cue anger and negative industry publicity.
Comment
Cutting through the clearly distressing personal issues, what is clear is that the now defunct ROPUK, who selected products and performed due diligence for IFA’s, made a bad call. The ROPUK “army of IFA’s” made the assumption that the St George Hills development was as good as the previous ROPUK investments and “introduced” clients to the project in good faith.
The IFA’s working for ROPUK used the “law of agency” and introduced business on a “non advice” basis so they should be protected from any civil legal action from disgruntled clients or FSA fines. However, a grey exists in FSA legislation which states that IFA’s have a “duty of care” when introducing clients to third party products. It will be interesting to see if there are any repercussions.
What is abundantly clear though if that the experience of IFA’s of recommending this project through ROPUK has tarnished the reputation of overseas property in the eyes of financial advisors.
The industry will have to work very hard to regain that trust.
Source: Global edge
User Comments
Only someone working in the Financial Services can come up with comments such as "I suppose they should have predicted the worldwide economic downtown, communication failures between developer, solicitor, bank and client as well as massive currency fluctuation" do me a favour! is it not their responsiblility and their duty of care and more importantly their JOB! to know the potential pitfalls and explain to the customer fully (in plain English) to the customer? As per the norm and as per most IFAs they want the business but always the first ones to shift responsibility with a "it was not me gov" mentality thats what has tarnished the industry not the people who buy the products.
Colin Lynch,
PVT
I suppose they should have predicted the worldwide economic downtown, communication failures between developer, solicitor, bank and client as well as massive currency fluctuation.
Hindsight is a wonderful thing and the BBC have chosen to sensationalise a small handful of clients woes. This should not affect the industry at all - perhaps these clients should not have purchased but then again the world was a very different place a few years ago.
Colin Jackson,
Jackson Financial